Early customer response to Microsoft's AI-powered Copilot services has been very positive, which bodes well for Microsoft stock, a Wall Street analyst said.
Wedbush Securities analyst Daniel Ives said his firm's customer checks around Microsoft's Copilot services make him incrementally more bullish on the company's prospects. He reiterated his outperform rating on Microsoft stock and raised his price target to 450 from 425.
On the stock market today, Microsoft stock advanced 0.3% to close at 375.28.
"Based on our recent work in the field, we believe over the next 3 years over 60% of its Microsoft installed base will ultimately be on this AI functionality for the enterprise/commercial" segment, Ives said in a client note late Wednesday.
Microsoft Stock Hasn't Factored In AI Lift
Redmond, Wash.-based Microsoft made its Office Copilot services available to enterprise users starting Nov. 1.
The Copilot services use generative artificial intelligence to aid workers in doing research, making reports and other tasks. The technology is "game changing," Ives said.
Use of the Copilot services should build in fiscal 2024, which ends on June 30, he said. But fiscal 2025 will be the "inflection year," Ives said.
"AI (is) set to change the cloud growth trajectory in Redmond the next few years," Ives said.
However, Microsoft stock has not priced in the impact of the AI opportunity, he said.
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